Trade Deficit Is Narrower as Economy Slows Buying

www.nytimes.com By BLOOMBERG NEWS

ASHINGTON, March 12 (Bloomberg News) — The trade deficit narrowed in January from a record as Americans bought fewer foreign-made goods in a slowing economy and exports rose, the Commerce Department reported today.

The trade gap in goods and services was $41.1 billion, trailing only a revised $44.9 billion deficit in December, the department said. For all of last year, the deficit reached a record $435.7 billion.

Growth forecasts are slipping as consumers rein in spending and business investment is stagnant, suggesting that Americans may buy fewer imported goods. Economic growth may ebb this year to 2.3 percent from 2.4 percent in 2002, a U.C.L.A. study said. In February, manufacturing slowed, 308,000 jobs evaporated and consumer confidence reached a nine-year low.

"We will see less inventory building in the first quarter and therefore fewer imports," given the prospect of war with Iraq and the slowing economy, said Elisabeth Stoegmueller, a Dresdner Kleinwort Wasserstein economist in New York who projected that the deficit would narrow to $41.5 billion. "It comes down to final demand in the end, and that is just not picking up yet."

Imports fell 2 percent in January, to $123 billion, led by declines for autos and consumer goods, while exports rose 1.6 percent, to $81.9 billion, helped in part by a weaker dollar. The dollar has fallen 26 percent against the euro and 9 percent against the yen in a year, making American goods less costly relative to European and Japanese products.

Economists had forecast a deficit of $43.4 billion compared with $44.2 billion in December.

Imports of autos and parts dropped 4.9 percent in January, to $16.8 billion. Americans bought 3.9 percent less in imported consumer goods, and companies spent 1.1 percent less on capital goods like telecommunications equipment and computers.

Rising oil prices, spurred by political discord in Venezuela and war expectations in the gulf region, pushed the value of petroleum imports to $7.4 billion from $7 billion the previous month. The price of oil surged nearly 15 percent, and the number of barrels imported fell to 268.4 million from 289.3 million as Venezuelan exports dropped.

Shipments abroad of consumer goods rose 6.9 percent in January, to $7.4 billion, led by a surge in pharmaceuticals. Foreign companies bought 2.5 percent more capital goods.